Month: April 2013

SUCCESSFULLY USING BUSINESS RECORDS AT TRIAL

Trials in business disputes typically deal with documents such as correspondence, ledgers, contracts, and other business records.  While those documents by themselves are often inadmissible hearsay, business trial attorneys usually get the documents into evidence via the “business records exception” to the rule against hearsay.  The business record exception is based on the concept that records made in the regular course of business are sufficiently reliable to justify their admission into evidence.

In Florida, the business records exception is codified at section 90.803(6)(a), Florida Statutes, which provides:

[T]he following [is] not inadmissible as evidence, even though the declarant is available as a witness:

(6) Records of regularly conducted business activity.

(a) A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinion, or diagnosis, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity and if it was the regular practice of that business activity to make such memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or as shown by a certification or declaration that complies with paragraph (c) and s. 90.902(11), unless the sources of information or other circumstances show lack of trustworthiness.

Florida appellate courts have explained that to secure admissibility under the business record exception, the proponent must show that (1) the record was made at or near the time of the event; (2) was made by or from information transmitted by a person with knowledge; (3) was kept in the ordinary course of a regular conducted business activity; and (4) that it was a regular practice of that business to make such a record.  See, for example, Jackson v. State, 738 So.2d 382 (Fla. 4th DCA 1999).

Additionally, the proponent is required to present this information in one of three formats.  First, the proponent may take the traditional route, which requires that a records custodian take the stand and testify under oath to the predicate requirements.  Second, the parties may stipulate to the admissibility of a document as a business record.  See, for example, Kelly v. State Farm Mut. Auto. Ins., 720 So.2d 1145 (Fla. 5th DCA 1998).  Third and finally, since July 1, 2003, the proponent can establish the business-records predicate through a certification or declaration that complies with sections 90.803(6)(c) and 90.902(11), Florida Statutes.  The certification — under penalty of perjury — must state that the record: (a) was made at or near the time of the occurrence of the matters set forth by, or from information transmitted by, a person having knowledge of those matters; (b) was kept in the course of the regularly conduct activity; and (c) was made as a regular practice in the course of the regularly conducted activity.

The Supreme Court of Florida in Yisreal v. State of Florida, 993 So.3d 952 (Fla. 2008), identified other important considerations.  First, if evidence is to be admitted under one of the exceptions to the hearsay rule, it must be offered in strict compliance with the requirements of that particular exception.  Second, when a document is made for something other than a regular business purpose, it does not fall within the business record exception.  For example, whenever a record is made for the purpose of preparing for litigation, its trustworthiness is suspect and should be closely scrutinized.  See, for example, United States v. Kim, 595 F.2d 755 (D.C. Cir. 1979), which rejected an argument that a document created solely for litigation purposes was admissible as a business-records summary of otherwise admissible records.  Following the reasoning in Kim, the court in Yisreal did not admit a summary of otherwise admissible records, because the underlying records were never tendered into evidence.  The business-records exception to the hearsay rule does not authorize hearsay testimony concerning the contents of business records which have not been admitted into evidence.

With planning, business records are generally easy to admit into evidence.  It simply requires a plan to follow the requirements of the evidence code.  This is done most easily well in advance of trial.

Peter T. Mavrick represents businesses in commercial litigation, labor/employment law, and real property litigation.  Mr. Mavrick has successfully represented many businesses in negotiations, mediations, and litigation.  This article is not a substitute for legal advice tailored to a particular situation.  Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.

APRIL 2013 TRIAL VICTORY FOR MAVRICK LAW FIRM CLIENT

In April 2013, the Mavrick Law Firm represented a victorious client in state court in Broward County, Florida.  The case involved a lawsuit filed by a construction subcontractor against the general contractor in a commercial construction case.  The Mavrick Law Firm successfully defended the general contractor at trial.   The verdict was a complete defense verdict of no liability.  In addition, the Mavrick Law Firm also filed a counterclaim on behalf of the general contractor, and prevailed in that counterclaim at trial.  Attorney Peter Mavrick was lead counsel and was assisted by attorney David Friedman as second chair at the trial.

FLORIDA LAW CONCERNING AN EMPLOYER’S JOB REFERENCE IMMUNITY

When a prospective employer contacts a potential employee’s former employer for a job reference, what liability does the former employer potentially face when responding?  And is it prudent for a former employer to create potential liability issues by commenting on a former employee?

Prior to 1990, employers had a common law qualified privilege to discuss former employees with prospective employers without liability.  Thereafter the Florida Legislature enacted Florida Statutes section 768.095, which is the Legislature’s codification of the common law.  The statute provides that:

An employer who discloses information about a former employee’s job performance to a prospective employer of the former employee upon request of the prospective employer or of the former employee is presumed to be acting in good faith and, unless lack of good faith is shown by clear and convincing evidence, is immune from civil liability for such disclosure or its consequences.  For purposes of this section, the presumption of good faith is rebutted upon a showing that the information disclosed by the former employer was knowingly false or deliberately misleading, was rendered with malicious purpose, or violated any civil right or the former employee protected under chapter 760.

The statute is an affirmative defense, so a former employee must first demonstrate the basic elements of a defamation case, i.e., a false and defamatory statement about another.  As one Florida appellate court explained, “[a] defamatory statement is one that tends to harm someone’s reputation in the community to deter others from associating with that person.”  Thomas v. Jacksonville Television, Inc., 699 So.2d 800, 803 (Fla. 1st DCA 1997).  If a statement is both false and defamatory, then the employee must also show by clear and convincing evidence that the employer’s statement to the prospective employer was “knowingly false,” “deliberately misleading,” or “rendered with a malicious purpose.”

Even if an employer defeats a defamation claim, it still could be sued for tortious interference with an advantageous business relationship.  The elements of the tort of intentional interference with an advantageous business relationship are (1) the existence of a business relationship not necessarily evidenced by an enforceable contract, (2) the knowledge of the relationship on the part of the defendant, (3) an intentional and unjustified interference with that relationship by the defendant, and (4) damage to the plaintiff as the result of the breach of that relationship.  In other words, even if a job reference does not rise to the level of a defamatory statement, it might constitute tortious interference with an advantageous business relationship.  A recent appellate court decision addressed this issue.

Linafelt v. Beverly Enterprises-Florida, Inc., 745 So.2d 386 (Fla. 1st DCA 1999), concluded there was no defamation when a former employer spoke negatively about the plaintiff’s job performance because the evidence demonstrated that the former employer did not make any false statements.  However, the appellate court in Linafelt allowed the employee to have another jury trial on the issue of tortious interference with an advantageous business relationship.  The appellate court suggested there was enough evidence for a reasonable jury to find the employer made a deliberately misleading or malicious statement about the former employee, even though the statement was “technically true.”

Due to the potential for costly lawsuits pertaining to job references, many employers decide the most prudent course is simply to disclose the former employee’s dates of employment and last position held, with no further comment.  While the employer could succeed in defense against a lawsuit asserting defamation or tortious interference with an advantageous business relationship, it is often more prudent to avoid the potential lawsuit altogether.  There are times, however, when moral reasons dictate that one should warn a prospective employer if the former employer is asked for a reference.  That of course is within the discretion and judgment of the business owner.

Peter T. Mavrick represents business owners in labor/employment and business litigation.  Mr. Mavrick has successfully represented many businesses in negotiations, in response to threatened legal action, and in court.  This article is intended for information purposes only and is not legal advice.  This article is not a substitute for legal advice tailored to a particular client’s situation.  Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida  33311; Email: peter@mavricklaw.com.

 

RECENT CASE HOLDS PREGNANCY IS NOT A “DISABILITY” UNDER THE AMERICANS WITH DISABILITIES ACT

The United States Court of Appeals for the Fourth Circuit, interpreting the Americans With Disabilities Act (“ADA”) before its 2008 amendments, recently ruled in Young v. United Parcel Service, Inc., 707 F.3d 437 (4th Cir. 2013), that an employee’s pregnancy does not justify a disability discrimination lawsuit.  The ADA is a federal law that prohibits discrimination against persons who are disabled, have  a record of being disabled, or are regarded as disabled.  An employee has three avenues to establish the existence of a disability under the ADA:

(1) a physical or mental impairment that substantially limits one or more major life activities of the employee;

(2) a record of such an impairment; or

(3) the employee is regarded as having such an impairment.

The appellate court initially explained that pregnancy is not a “disability” under the ADA, and cited the fact that this interpretation of the statute is nearly uniform under federal case law.

The the appellate court next addressed the employee’s contention that her situation implicated the third prong under the ADA, i.e., being regarded as having an impairment.  The employee argued that UPS “regarded her pregnancy-related work limitations” as a disability.  A “regarded as” disabled claim includes the circumstance when the employer mistakenly believes that an actual, non-limiting impairment substantially limits one or more life activities.  For an employee’s lawsuit to succeed, the employer must believe that an individual has a substantially limiting impairment when, in fact, the impairment is not so limiting.  Major life activities under the ADA are “those activities that are of central importance to daily life,” such as walking, seeing, and hearing.  Where an employee contends he or she was discriminated against by being regarded as disabled, the courts focus on the reactions and perceptions of the employer’s decision-makers.  The appellate court explained that the employee’s claim did not establish a violation of the ADA “[b]ecause UPS possessed objective facts suggesting that Young might have lost the ability to perform central job functions, [and therefore] it had a legitimate reason to seek some verification that Young had recovered her ability to perform those duties.  The appellate court relied in part on analogous precedent in Porter v. U.S. Alumoweld Co., 125 F.3d 247 (4th Cir. 1997), holding that an employer’s medical inquiry was job-related and consistent with business necessity when the employee returned to the job involving lifting after back surgery.

The appellate court also disagreed with the employee’s second contention, that UPS had a duty to seek additional information from her healthcare providers and independently evaluate her ability to return to work.  The employee argued on appeal that UPS “should have engaged in an interactive process to determine whether Young was capable of performing her job.”  Although the ADA does advise employers to initiate “an informal, interactive process” when determining whether an individual with a disability needs an accommodation, no such counsel applies to the determination of whether an employee is disabled in the first instance.  The appellate court explained that the employee presented no valid reason to conclude that an employer acts inappropriately in relying on the employee’s own objective evidence.  The appellate court found persuasive the case of Breitkreutz v. Cambrex Charles City, Inc., 450 F.3d 780 (8th Cir. 2006), which held that “[i]f a restriction is based on the recommendation of physicians, then it is not based upon myths or stereotypes about the disabled and does not establish a perception of disability.”  Because the employee pointed to no more than the objective fact of her pregnancy, and offered no evidence tending to show that UPS management subjectively believed the employee was disabled, the employee did not present sufficient evidence to raise a factual issue of her “regarded as” claim.

Peter T. Mavrick and the Mavrick Law Firm represent businesses and management in Fort Lauderdale, Miami, and Palm Beach, Florida.  The Mavrick Law Firm practices law in South Florida in labor/employment disputes, and in business and real estate litigation.  The Mavrick Law Firm has successfully represented many businesses in negotiations, in response to threatened legal action, and in court.  This article is intended for information purposes only and is not legal advice.  This article is not a substitute for legal advice tailored to a particular client’s situation.  Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida  33311; Email: peter@mavricklaw.com.

PERSONAL LIABILITY FOR A CORPORATION’S OBLIGATIONS UNDER FLORIDA LAW: “PIERCING THE CORPORATE VEIL”

In business litigation cases, it is important to evaluate the possibility of “piercing the corporate veil,” whether from the perspective of plaintiff/creditor or defendant/debtor.  While a corporate debtor might be uncollectable due to its lack of financial resources, the story does not always end with the corporation’s own balance sheet.  When a plaintiff/creditor can prove the requirements to pierce the corporate veil, a prudent corporate defendant/debtor and its principals might be more amenable to making substantial efforts to resolve the case rather than taking their chances on an adverse judgment.

As a general principle, corporations are legal entities that function with limited liability.  Corporations are regarded as such because the corporate obligations remain those of the corporate entity, meaning that the corporation’s owners, officers, and shareholders are not held personally liable for corporate debt.  However, in certain situations courts allow a creditor to “pierce the corporate veil” and hold corporate owners personally liable for corporate debts.

In Florida, “piercing the corporate veil” is governed by Florida Supreme Court case Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114 (Fla. 1984), which holds “the corporate veil may not be pierced absent a showing of improper conduct.”  This is not the most detailed description, especially in the legal realm where attorneys are accustomed to applying a particular set of facts to specific multi-factor tests.  In a more recent case, Florida’s Third District Court of Appeal formulated a three factor test in Gasparini v. Pordomingo, 972 So.2d 1053 (Fla. 3d DCA 2008).  Under the Gasparini case, to pierce the corporate veil and hold a shareholder liable for a corporate liability, a creditor must prove the following:

(1)        the shareholder dominated and controlled the corporation to such an extent that the corporation’s independent existence, was in fact non-existent and the shareholders were in fact alter egos of the corporation;

(2)        the corporate form must have been used fraudulently or for an improper purpose; and

(3)        the fraudulent or improper use of the corporate form caused injury to the claimant.

The corporate form can also be pierced under certain circumstances when a creditor seeks to hold a parent corporation liable for the obligation of a subsidiary.  For example, Ocala Breeders’ Sales Co. v. Hialeah, Inc., 735 So. 2d 542 (Fla. 3d DCA 1999), identified the following factors to help determine when the subsidiary is merely an instrumentality of the parent corporation, including whether: (1) the same person controlled both the parent and subsidiary; (2) they operated out of the same facilities as the parent; (3) the subsidiary’s contracts were performed by employees of the parent; (4) the subsidiary was never capitalized; and (5) the subsidiary shared bank accounts and financial obligations with the parent.  All of these factors were established, and the court found that the subsidiary was merely an instrumentality of the parent corporation.  Ocala Breeders’ also clarified what is meant by the term “improper conduct”: “[T]o pierce the corporate veil under Florida law, it must be shown not only that the wholly-owned subsidiary is a mere instrumentality of the parent corporation but also that the subsidiary was organized or used by the parent to mislead creditors or to perpetrate a fraud upon them.”  The court held that a parent corporation defrauded the plaintiff when its subsidiary entered into a contract requiring it to make certain capital improvements.  The subsidiary did not have the ability to fulfill the contract since it was never capitalized.  In that scenario, the court found it appropriate to bypass the personal liability protection afforded to the corporate officers based on an organized effort to perpetrate a fraud on corporate creditors.

Whether representing the plaintiff/creditor or the defendant/debtor, in business litigation it is often prudent to evaluate the possibility of piercing the corporate veil.

Peter T. Mavrick represents business owners in business litigation.  Mr. Mavrick has successfully represented many businesses in negotiations, in response to threatened legal action, and in court.  This article is intended for information purposes only and is not legal advice.  This article is not a substitute for legal advice tailored to a particular client’s situation.  Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida  33311; Email: peter@mavricklaw.com.